Copy and Edit

Macroeconomics

Description

Exam 2 Chapters 8, 9, 10
acox12
Quiz by acox12, updated more than 1 year ago
acox12
Created by acox12 over 10 years ago
2677
1
0

Resource summary

Question 1

Question
If real GDP in a small country in 2005 is $8 billion and the real GDP in the same country in 2006 is $8.3 billion, the growth rate of real GDP between 2005 and 2006
Answer
  • is 3.75%
  • is 3.6%
  • is 3.0%
  • cannot be determined from the information given.

Question 2

Question
According to the "Rule of 70", how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?
Answer
  • less than 1 year
  • 14 years
  • 5 years
  • 35 years

Question 3

Question
The quantity of goods and services that can be produced by one worker or by one hour of work is
Answer
  • labor productivity
  • technology
  • real GDP
  • human capital

Question 4

Question
What two factors are the keys to determining labor productivity?
Answer
  • technology and the quantity of capital per hour worked
  • the growth rate of real GDP and interest rate
  • the average level of education of the workforce and the price level
  • the business cycle and the growth rate of real GDP

Question 5

Question
Human capital refers to which of the following?
Answer
  • manufactured goods that are used to produce other goods and services
  • the accumulated knowledge and skills workers acquire from education and training or from their life experiences
  • the quality of good and services that can be produced by one worker or by one hour of work
  • physical that is made by human laborers, not machines

Question 6

Question
On difference between stocks and bonds is that
Answer
  • stocks represent ownership in companies, while bonds represent ownership in banks.
  • stocks usually issued in electronic form, while bonds are usually issued in paper form.
  • stocks so not involve a promise to repay the purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond.
  • stocks are financial securities, while bonds are labor market securities.

Question 7

Question
In addition to matching households that have excess funds with firms that want to borrow funds, what three key services does the financial system provide for savers and borrowers?
Answer
  • risk-sharing, liquidity, and information
  • information, profit, and interest
  • high risk, high profit, and low savings
  • bonds, stocks, and mutual funds

Question 8

Question
In a closed economy, which of the following components of GDP is NOT included?
Answer
  • consumption
  • government spending
  • net exports
  • investment

Question 9

Question
In a closed economy, which of the following equations reflects investment? (Y=GDP, C= Consumption, G=Government purchases, T=Taxes, and TR=Transfers)
Answer
  • Y - C - G
  • C + G - T
  • Y - T + TR
  • Y - C - T

Question 10

Question
Under which of the following circumstances would the government be running a deficit?
Answer
  • G= $7 trillion T= $10 trillion TR= $3 trillion
  • G= $7 trillion T= $7 trillion TR= $0
  • G= $5 trillion T= $7 trillion TR= $1 trillion
  • G= $5 trillion T= $5 trillion TR= $1 trillion

Question 11

Question
Inflation tends to________during the expansion phase of the business cycle and________during a recession phase of the business cycle.
Answer
  • increase; increase further
  • increase; decrease
  • decrease; decrease further
  • decrease; increase

Question 12

Question
Consider the following data for a simple economy: Total Population 20,000 Working-Age Population 15,000 Employment 1,000 Unemployment 100
Answer
  • (100/1,000) X 100
  • (100/20,000) X 100
  • (100/15,000) X 100
  • (100/1,100) X 100

Question 13

Question
Total Population 20,000 Working-Age Population 15,000 Employment 1,000 Unemployment 100 Refer to the table above. The unemployment rate for this simple economy equals
Answer
  • (1,100/20,000) X 100
  • (1,000/15,000) X 100
  • (1,000/1,100) X 100
  • (1,100/15,000) X 100

Question 14

Question
Cyclical employment is the result of
Answer
  • a slowdown in the economy
  • the ups and downs in inflation
  • the search process of matching workers with jobs
  • frictional unemployment equals zero

Question 15

Question
Economist consider full employment to occur when
Answer
  • everyone who wants a job has a job
  • all existing unemployment is either frictional unemployment or structural unemployment
  • frictional unemployment and structural unemployment equals zero
  • frictional unemployment equals zero

Question 16

Question
Which of the following would be the best measure of the cost of living?
Answer
  • real GDP per person
  • GDP deflator
  • real GDP
  • Consumer Price Index

Question 17

Question
The consumer price index is the
Answer
  • ratio of the dollar amount necessary to buy the market basket of goods in that year divided by the dollar amount necessary to buy of goods in the base year.
  • ratio of the dollar amount necessary to buy a basket of goods typically consumed in the current period divided by the dollar amount necessary to buy the market basket of goods in the base year.
  • cost of a basket of goods typically consumed in the current period.
  • the cost of a basket of goods typically consumed in the base year.

Question 18

Question
Consider the following values of the consumer price index for 2002 and 2003. Year CPI 2002 180 2003 184 The inflation rate for 2003 equals
Answer
  • 184 percent
  • 2.2 percent
  • 4.0 percent
  • 18.4 percent

Question 19

Question
The real interest rate equals the nominal interest rate_______the inflation rate.
Answer
  • times
  • divided by
  • minus
  • plus

Question 20

Question
Suppose you borrow $1,000 at an interest rate of 12 percent. If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate inflation.
Answer
  • less than 7 percent
  • greater than 7 percent
  • equal to 7 percent
  • equal to 0 percent

Question 21

Question
Assume the market basket for the consumer price index has two products--meant and potatoes--with the following values in 2000 and 2006 for price and quality: Base Year Product Quality Price (2000) Product Quality Price (2006) Meat 100 $10 Meat 120 $12 Potatoes 200 $2 Potatoes 180 $3 The Consumer Price Index for 2006 equals
Answer
  • 125
  • 141
  • 129
  • 135

Question 22

Question
Full employment is not considered to be zero unemployment, because
Answer
  • of cyclical unemployment
  • some people do not want a job
  • even though there are enough jobs, the search process of matching workers with jobs and the mismatch between skills and job requirements prevent individuals from immediately finding jobs.
  • there are not enough jobs for everyone who wants one.

Question 23

Question
Gross domestic product in the economy is measured by the
Answer
  • total number of goods and services produced in the economy
  • total number of services produced in the economy
  • dollar value of all final goods and services produced in the economy
  • total number of goods produced int eh economy

Question 24

Question
How are intermediate goods treated in the calculation of GDP?
Answer
  • Their value is not counted separately, but included as part of the value of the final good for.
  • Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input.
  • They are included only if they are imported.
  • Their value is counted separately, but not included as part of the value of the final good for which they are an input.

Question 25

Question
Investment spending includes spending on
Answer
  • transfer payments
  • food
  • changes in business inventories
  • stocks

Question 26

Question
In a small economy, gross investment in 2009 is $1,500, consumption spending is $6,000, net investment is $200, government spending is $1,500, exports are $2,000 and imports are $1,000. What is the GDP for the economy in 2009?
Answer
  • $10,700
  • $10,300
  • $10,200
  • $10,000

Question 27

Question
GDP is not a perfect measure of well-being because
Answer
  • GDP is not adjusted for pollution.
  • GDP is adjusted for increases in drug addiction .
  • GDP is adjusted for changes in crime rates.
  • the value of leisure is included in GDP.

Question 28

Question
The underground economy can be described as
Answer
  • production of infrastructure that spurs growth in the rest of the economy.
  • production of intermediate goods and services.
  • economic production that includes mining.
  • economic activity that is hidden from the government to avoid taxed or because the activity is illegal.

Question 29

Question
The measure of production that values production using current prices is called
Answer
  • underground GDP
  • real GDP
  • nominal GDP
  • value-added GDP

Question 30

Question
Given the information, what can we say has happened in the economy from 2008 and 2009? 2008 2009 Nominal GDP $10,000 $12,000 Real GDP $9,500 $10,500
Answer
  • The price level has risen.
  • The price level has remained constant.
  • The price level has fallen.
  • Not enough information is available to determine what has happened to prices.

Question 31

Question
If real GDP increases we know for sure that
Answer
  • prices have risen
  • output has risen
  • prices have remained constant
  • prices have risen but output has remained constant

Question 32

Question
If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years.
Answer
  • 270%
  • 50%
  • 5%
  • 2.7%

Question 33

Question
Gross national product is defined as
Answer
  • the value of final goods and services produced within the United States, by United States residents.
  • the value of final goods and services produced outside of the United States.
  • the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States.
  • the value of final goods and services produced within the United States.

Question 34

Question
Disposable personal income is
Answer
  • national income minus depreciation.
  • personal income minus indirect business taxes.
  • national income minus personal taxes.
  • personal income minus personal taxes.

Question 35

Question
National income is
Answer
  • NNP minus income taxes.
  • GDP minus depreciation.
  • GNP plus depreciation.
  • GDP minus sales taxes.

Question 36

Question
What are the four major categories of expenditure?
Answer
  • Labor, capital, natural resources, and entrepreneurship.
  • Final goods, intermediate goods, production, and income.
  • Wages, interest, rent, and profit.
  • Consumption, investment, government purchases, and net exports.

Question 37

Question
What is GDP an imperfect measurement of total production in the economy?
Answer
  • GDP does not include household production or production form the underground economy.
  • The official measure of GDP does not include intermediate goods and services.
  • GDP measures total income paid to the factors of production, not production
  • The BEA does not include the value of new houses in GDP

Question 38

Question
What are the four categories of income?
Answer
  • wages, salaries, interest, and dividends
  • consumption, investment, government purchases, and net exports
  • wages, interest, rent, and profit
  • labor , capital, natural resources, and entrepreneurship

Question 39

Question
Suppose the base year is 2001. Looking at GDP data from the United States from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP?
Answer
  • RGDP = NGDP because prices are stable.
  • RGDP < NGDP because prices are rising.
  • RGDP > NGDP because prices are falling.
  • The relationship is uncertain without more information on prices.

Question 40

Question
Real GDP per capita is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being?
Answer
  • The costs of pollution are not included.
  • The value of leisure is not included
  • GDP does not include crime rates or income distribution
  • All of the above

Question 41

Question
Personal income is
Answer
  • national income minus retained corporate earnings plus government transfer payments and interest on government bonds.
  • national income minus income taxes.
  • equal to the value of all final goods and services produced within a country's borders during one year.
  • national income plus government transfer payments.

Question 42

Question
The largest component of gross domestic income is
Answer
  • rent.
  • profits.
  • wages.
  • interests.

Question 43

Question
Coffee beans purchased by a coffee shop are a
Answer
  • intermediate good.
  • neither.
  • final good.

Question 44

Question
Johnny is currently "in-between" jobs. What type of unemployment fits Johnny's status?
Answer
  • Structurally unemployed
  • Seasonally unemployed
  • Cyclically unemployed
  • Fictionally unemployed

Question 45

Question
Which of the following makes changes in the CPI overstate the true inflation rate?
Answer
  • Increase in quality bias
  • New product bias
  • Substitution bias
  • All of the above

Question 46

Question
Which of the following best describes a current trend in the labor force participation rate?
Answer
  • It is increasing for men and decreasing for women.
  • It is decreasing for both men and women.
  • It is increasing for both men and women.
  • It is decreasing for men and increasing for women.

Question 47

Question
How does the U.S. economy create and destroy millions of jobs each year? (Mark all that apply.)
Answer
  • Some businesses are expanding, while others are contracting
  • In the market system, new firms are constantly entering and exiting various industries.
  • The federal government determines that certain industries are obsolete and closes firms.
  • When unemployment is high, the federal government hires more workers to offset the effects of unemployment.

Question 48

Question
IF a 3-month Treasury bill pays 5.5% and the change in the consumer price index (CPI) is 4.7%, what is the real interest rate (the true return to lending)?
Answer
  • 4.7%
  • 10.2%
  • 5.5%
  • 0.8%

Question 49

Question
Your father earned $34,000 per year in 1984. To the nearest dollar, what is that equivalent to in 2008 if the CPI in 2008 is 215 and the CPI in 1984 is 104?
Answer
  • $34,000
  • $70,288
  • $16,447
  • $73,100

Question 50

Question
Having happy workers increases business. This is an example of
Answer
  • Structural unemployment
  • Union contracts
  • Market strategies
  • Efficiency wages

Question 51

Question
Even perfectly anticipated inflation imposes costs. Why?
Answer
  • A)Some wages will fail to keep up with the anticipated inflation.
  • B)Menu costs
  • C)Paper money loses it purchasing power by the rate of inflation.
  • A and C only.
  • All of the above

Question 52

Question
Consider the following table: Nominal Average Year Hourly Earnings CPI 2008 $16 202 2009 $17 207 2010 $18 209 What is the real average hourly wage in 2009?
Answer
  • $8.61
  • $7.92
  • $8.21
  • $17.42

Question 53

Question
Consider the following table: Nominal Average Year Hourly Earnings CPI 2008 $16 202 2009 $17 207 2010 $18 209 What can be said about real average hourly earnings and nominal average hourly earnings between 2008 and 2010?
Answer
  • Real average hourly earnings decreased and nominal average hourly earnings increased.
  • Both real and nominal average hourly earnings decreased.
  • Real average hourly earnings increased and nominal average hourly earnings decreased.
  • Both real and nominal average hourly earnings increased.

Question 54

Question
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."
Answer
  • True. If wages are increasing slower that the average price of goods and services, purchasing power increases.
  • True. If wages are increasing slower that the average price of goods and services, purchasing power falls.
  • False. A higher wage decreases purchasing power regardless of inflation.
  • False. A higher wage increases purchasing power regardless of inflation.

Question 55

Question
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."
Answer
  • True. If wages are increasing slower that the average price of goods and services, purchasing power increases.
  • True. If wages are increasing slower that the average price of goods and services, purchasing power falls.
  • False. A higher wage decreases purchasing power regardless of inflation.
  • False. A higher wage increases purchasing power regardless of inflation.

Question 56

Question
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."
Answer
  • True. If wages are increasing slower that the average price of goods and services, purchasing power increases.
  • True. If wages are increasing slower that the average price of goods and services, purchasing power falls.
  • False. A higher wage decreases purchasing power regardless of inflation.
  • False. A higher wage increases purchasing power regardless of inflation.

Question 57

Question
When the economy is at full employment,
Answer
  • all remaining unemployment is either frictional or structural.
  • the nature rate of unemployment prevails.
  • the unemployment rate is greater than zero.
  • All of the above.

Question 58

Question
Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment rate?
Answer
  • Number of unemployed ________________________ x 100 Working-age population
  • Number of unemployed ________________________ x 100 Number of employed
  • Number in labor force ________________________ x 100 Number of unemployed
  • Number of unemployed ________________________ x 100 Number in labor force

Question 59

Question
The true cost of borrowing and lending is best measured by
Answer
  • the inflation rate.
  • the three-month U.S. Treasury bill rate.
  • the nominal interest rate.
  • the real interest rate.

Question 60

Question
Which of the following can give an early warning of future increases in the price level?
Answer
  • Consumer price index
  • Producer price index
  • GDP deflator
  • All of the above

Question 61

Question
Which of the following can give an early warning of future increases in the price level
Answer
  • Consumer price index
  • Producer price index
  • GDP deflator
  • All of the above

Question 62

Question
As of September 2011, which of the following demographics groups has the highest unemployment rate?
Answer
  • Asians
  • African Americans
  • Hispanics
  • Whites

Question 63

Question
What effect do labor unions have on the unemployment rate?
Answer
  • By increasing the wage above market equilibrium, labor unions considerably increase the unemployment rate.
  • By increasing the wage above market equilibrium, labor unions considerably decrease the unemployment rate.
  • Labor unions can significantly increase the unemployment rate when members go on strike.
  • Since few non-government workers are unionized, there is no significant effect on the unemployment rate.

Question 64

Question
What factors would cause the U.S. labor productivity to be nearly six times higher than Russian labor productivity?
Answer
  • The size of the civilian labor force in larger in Russia, causing diminishing returns to set in.
  • The size of the civilian labor force is larger in the U.S.
  • The U.S. has more capital available per worker and higher levels of technology.
  • Russia overall has a smaller capital stock

Question 65

Question
During a recession, unemployment would be expected to
Answer
  • increase
  • decrease
  • stay the same

Question 66

Question
during a recession, durable goods production, such as automobiles, would be expected to
Answer
  • increase
  • decrease
  • stay the same

Question 67

Question
During a recession, the inflation rate would be expected to
Answer
  • stay the same
  • decrease
  • increase

Question 68

Question
The most important factor in explaining increases in real GDP per capita in the long run is increase in productivity.
Answer
  • True
  • False

Question 69

Question
When tax revenue exceeds government spending (government purchases and transfer payment) there is a
Answer
  • budget surplus
  • balanced budget
  • budget deficit

Question 70

Question
When tax revenue equals government spending there is a
Answer
  • balanced budget
  • budget surplus
  • budget deficit

Question 71

Question
When tax revenue is less than government spending there is a
Answer
  • budget deficit
  • a balanced budget
  • budget surplus

Question 72

Question
Which of the following expressions shows the investment-saving equality?
Answer
  • S=Y+T-TR-G
  • S=Y+T-C-G
  • S=Y-C-G
  • S=Y+TR-C-T

Question 73

Question
Which of the following is not a loanable fund?
Answer
  • Real estate
  • Bank certificates of deposit
  • Bonds
  • Mutual fund shares

Question 74

Question
Households supply loanable funds because of the
Answer
  • wage income earned from working in the financial markets.
  • rent income they receive as resource owner.
  • interest income received from the borrowers
  • profit income earned from running a money-lending business

Question 75

Question
Businesses demand loanable funds because
Answer
  • firms need to borrow funds for new projects, such as building new factories or carrying out new projects
  • households charge a much higher rate of interest than the going rate of interest in the loanable funds market.

Question 76

Question
What is the general relationship between the business cycle and unemployment and inflation?
Answer
  • During an expansion, unemployment and inflation increase.
  • During an expansion, unemployment falls and inflation increase.
  • During an recession, unemployment and inflation increase.
  • During an recession, unemployment and inflation decrease.

Question 77

Question
The rule of 70 is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double.
Answer
  • True
  • False

Question 78

Question
Crowding out occurs when governments must borrow funds which cause interest rates to rise and thus private investment is reduced.
Answer
  • True
  • False

Question 79

Question
Two key factors that cause labor productivity to increase over time are
Answer
  • quantity of capital per hour worked
  • level of technology
  • quantity of labor per hour worked
  • decline in unionization
  • slacking of labor laws

Question 80

Question
Which of the following will NOT lead to economic growth?
Answer
  • Technological change
  • Increase in the capital stock
  • Increase in average wages
  • Improved labor productivity

Question 81

Question
Which of the following is most likely to lead to sustained long-run growth?
Answer
  • increases in labor productivity
  • increases in the labor participation rate
  • exploitation of natural resources
  • transfer of workers from agricultural to industrial sectors

Question 82

Question
During the expansion phase of the business cycle, production, employment, and income
Answer
  • increase
  • decrease

Question 83

Question
During the recession phase of the business cycle, production, employment, and income
Answer
  • increase
  • decrease

Question 84

Question
Firms that act as financial intermediaries match households that have excess funds with firms that want to borrow funds. What other key services does the financial system provide to savers and lenders?
Answer
  • allows savers to spread their money among many financial investments.
  • provides an easy method of exchanging a financial security for money.
  • collects and communicates information about borrowers to savers.
  • insures investments against decreasing in value.

Question 85

Question
Long-run growth in GDP is determined by
Answer
  • capital, labor productivity, and technology
  • capital, labor productivity, and government expenditures
  • consumption, investment, and government expenditures
  • consumption, investment, and technology

Question 86

Question
Technological progress is affected by
Answer
  • private property rights
  • new software developments
  • population growth
  • investment in capital
  • entrepreneurship

Question 87

Question
Potential GDP
Answer
  • measures the maximum that a firm is capable of producing
  • increases over time as the labor force grows.
  • increases over time as technological change occurs

Question 88

Question
Which of the following contribute(s) to shorter recessions,longer expansions, and less severe fluctuations in real GDP?
Answer
  • monetary policy
  • unemployment insurance
  • a service-based economy

Question 89

Question
Business cycle: alternating periods of economics expansion and economic recession.
Answer
  • True
  • False

Question 90

Question
Long-run economic growth: the process by which rising productivity increases the average standard of living.
Answer
  • True
  • False

Question 91

Question
The best measurement for the standard of living is
Answer
  • GDP per person
  • real GDP per capita

Question 92

Question
This is the equation of growth of real GDP: Real GDP 2012 - Real GDP 2011 --------------------------------------------- x 100 Real GDP 2011
Answer
  • True
  • False

Question 93

Question
Rule of 70= the number of years to double. 70 ---------------- Growth rate
Answer
  • True
  • False

Question 94

Question
The quantity of goods and services that can be produced in one hour of work or by one worker
Answer
  • labor productivity
  • capital
  • potential GDP

Question 95

Question
The quantity of goods and services that can be produced in one hour of work or by one worker
Answer
  • labor productivity
  • capital
  • potential GDP

Question 96

Question
Manufactured goods that are used to produce goods and services.
Answer
  • capital
  • Financial markets

Question 97

Question
The level of real GDP attained when all firms are producing at capacity.
Answer
  • Potential GDP
  • Labor productivity

Question 98

Question
Markets where financial securities such as stocks and bonds are bought and sold.
Answer
  • financial markets
  • financial intermediaries

Question 99

Question
The system of financial markets and financial intermediaries through which firms gain funds from households.
Answer
  • Financial system
  • Financial market

Question 100

Question
Firms such as banks, mutual funds, pension funds, and insurance companies, that barrow funds from savers and lend then to borrowers.
Answer
  • Financial intermediaries
  • Financial advisors

Question 101

Question
The interaction of borrowers and lenders that determines the market interest rate and quantity of loanable funds exchanged.
Answer
  • Market for loanable funds
  • Crowding out

Question 102

Question
A decline in private expenditures as a result of an increase in Government purchases.
Answer
  • Crowding out
  • Crowding in

Question 103

Question
During a recession, durable goods decrease and undurable goods don't change because they are essential.
Answer
  • True
  • False
Show full summary Hide full summary

Want to create your own Quizzes for free with GoConqr? Learn more.

Similar

Economic Growth
Maya Khangura
Macroeconomics year 1
Nkolika Ezepue
Chapter 16: The objectives and instruments of macroeconomic policy
callum_j.smith
Dictionary Macrostructure
Ash A
Chapter 15: Introducing macroeconomics
callum_j.smith
Monopolistic Competition VS Oligopoly
Tammy Sim
Exchange rates
callum_j.smith
Fundamental Economic Theories & Concepts
Zoe WATKINS
Economic summary December 2014
callum_j.smith
MACRO ECONOMICS
erikacotton
IS-LM model
midasremin
Browse Library